I have just received an invitation email from Microsoft to upgrade my hotmail account to an outlook.com one. I'm wondering what will happen to my phone (Xbox Music Pass, purchased apps, etc) if I do. Can anyone give me any info?

I kept my old hotmail address. The only thing that changed that way was the appearance of the webmail page. I chose to keep the old hotmail address since I used it for Windows Phone, Xbox Live, and my Microsoft account on Windows 8. I had no desire to reset everything and go get my apps again.

It's possible to change nothing but the web-based interface. I wouldn't be surprised if Microsoft comes up with some other name again. If I had to change my address every time Microsoft felt like changing, I'd have gone through @hotmail.com, @live.com, @outlook.com. At the rate they change, I'm sure they'll have something else in a couple years.

What did the content of the email state exactly? They are probably inviting you to upgrade to the outlook.com interface. (If you don't like the new look, you can always hit the "gear" and then "switch back to Hotmail") You can "upgrade your interface" at any time by just going to outlook.com and logging in with your Hotmail account.

I'm fairly confident that Microsoft is NOT sending out emails to ask people to change their email address, and it's not going to change by you clicking a link from an email (which is probably just to outlook.com). You CAN change your email to @outlook.com... but it would require a hard reset on your phone of course.

If this helps, right now Microsoft has REMOVED the functionality to rename your account since they had a few problems with it. So even if you wanted to you can't change/rename your email address at this time :)

I did the same, kept my Hotmail address and moved to the new interface. But I did go ahead and get an alias at outlook.com to reserve the name. It had it's own folder in my Hotmail account. And I can pin it as a tile on my phone and use if I choose.